Just bought a new F-350. I bought one used truck before. It blew up just as the first wave of summer heat hit. Of course I do service/replacements and not new construction. Regardless of taxes or anything else, I won't purchase anyones used vehicle. But then, I'm the one driving it not an employee.
There is nothing more frightful than ignorance in action....Mark Twain
These new rules are under that same code that Bush got through about instead of being able to write off 25 g a year for capital equipment cost, now the amount is up to 75 g.
The vehicle thing was added to these new rules. If you want to buy ten trucks this year, you can deduct the whole amount it cost for those trucks. In years past, you were not allowed to do this. The string attached is, taking the deduction all in one year, you can not depreciate over 5 years. If you think of it. You can never use the depreciation to cancel out from the actual cost, so with this new rule, you get to expense it all. On the flip side, if you lease, you expense it all anyway. Leasing is my thing and I think it's the best way to go.
Let me first understand what you want to do. You want to lease a personally owned vehicle to your business?
Well Number one, you as an individual can not own a POV and then lease it out to anyone. You must first be in business. You can sell one as a person to a business but you can not lease one. You can not rent or lease one unless you are also another business entity outside your HVAC gig. Property like a building is handled differently.
I use to work for a guy. He started a leasing company. The leasing company would purchase vehicles and then lease them to his mechanical contracting firm. So the answer is yes, you can do that, but you simply can't do it as MR. Amtec leasing his Personal vehicle to Amtec Services. You can do it, by: Mr Amtec who owns Amtec Leasing Inc. and Amtec Leasing Inc. leases new or used vehicles to Amtec Services.
But in all honesty. Unless you got 30 trucks on the road, which you don't, getting fancy like that can be a hard thing to track and keep up with. Your accountant might suggest this. Well think about that for just a second.
How do you get work from an existing customer. I will see things and mention to my customer "we should fix that and you'll save energy". I aint lying and yes it will benefit them, but it's not neccesarily neccesary. Same with an accountant. If he suggested this, it means he has more work to do for you. You would benefit by it but the question is, is it neccesary? My feeling is it is not.
I can tell you one thing that has helped me be very profitable. I keep things simple. Sometimes being simple costs a little more, but then again being simple allows me to concentrate on what I know and do best which is fiding and fixing HVAC/R.
The best thing you can do for yourself as a smalltime business owner is try to understand what you can do and can't do as far as expenses. Anytime I want something, or need to have a new tool or a new gadget, or a something that broke, or something I want, anything, I always ask myself, can I expense this out. If yes, I get it everytime. If no, I try to discipline myself.
As for leasing a vehicle and if it's a smart business decision? I don't buy the intrest rate game like benncool said. But too he is much older and wiser than I. This is my thinking. Simple math here. 500 bucks a month it cost me to insure, lease and drive a 1 year old vehicle. The maintenance and the wear and tear (depreciation) I don't worry about. I just write a check for 500 bucks and my vehicle worries are done. Period, end of story. Thats 6 grand a year. Which I pay in full. So I really don't have a monthly cost.
I don't even track oil changes as I get reminded of them. I lease from a commercial fleet lease company that does everything for me. They insure it, they letter it, they change the tires when they need it. They check it out once a month. They will loan me a another at no additional cost if this one is out of commision. Chances are it won't happen cause it is brand new. My commitment for this is a period of 12 months. That appeals to me as well. I get a new van every 12 months, unless I continue to lease the one I am in for another 12 months. At a lower cost. I aint tied up in something for 4 or 5 years.
Say I hire a guy. I don't need to lay out 40 grand right off for full out purchase. Or come up with 4 grand right off to down payment the truck and get it insured. The new guy will have to undergo some drivers training, and they do the background check and pee test the dude. At no cost to me. For me hiring someone, the hardest thing is putting them in a truck. Well, I solved that problem. I forgot to mention. Off the bat I got a fuel credit card too. There are 14 fuel depots for this leasing company here in Metro Detroit. One of them 4 miles from me. I just fuel up and the little computer disk on the side of the truck registers. 24/7 it is open. I get billed once every two months for my fuel. Awesome as well for tracking that for expenses too let me tell you. On top of that, they got a automatic truck wash, that will do your van with ladders on it. If you fill up, you can run your van through wash for nothing. It's an awesome set up.
For all that and more, for rouphly 6 to 8 grand a year, it's simple, no worries, no headaches. Not much in a way of commitment, which allows me to stay flexible. And on top of that, All expensed out.
I will say, at first. They were dragging a little and they were not meeting their end of the deal. However a new manager got in place about 3 months after I got into this. Dude. There is no other way than this to handle your vehicles.
Being that it is a pretty much fixed cost with out surprizes, it helps in that formula for knowing what you need a guy to perform to. Example being. I charge a $35 dollar truck charge for each service call. If a service man does 15 service calls a month, my van is paid for. And on average a guy usuallly will do 3 calls a day and thats 15 a week, so your van is paid for in the first week of every month. Thats the first 12 weeks of any given year, out of the remaining 40 weeks left. The other 3 weeks of a month or rather the remaining 40 weeks of the year are going to building profit margin. Thats 21 grand additional after 1 van a year. That 21 grand that is not being billed out as labor, but it sure is helping to pay the guy isn't it? So that 21 grand is a quarter of his pay, with out even billing an hour of labor out yet.
Think of too. My biggest beef was I would get thrown in these crappy vans. I hire a top notch guy, and I can put him in a very nice van for little next to nothing. For most good service techs, this is an important thing to them.